Monday, April 11, 2005

Much Ado About Nothing?

Denial can sometimes be useful. Denying yourself chocolate chip cookies, for example, if you want to lose weight.

But denial in the sense of being in denial…of not admitting the truth, or not being willing to see the what is happening around you—that is usually a dangerous thing. Especially so in human beings as well as in companies, where adaptation to changing circumstances is a key to longevity.

I bring this up after witnessing a stupendous example of denial today at a question and answer session with the CEO of one of the larger owners of radio stations in the U.S., whose stock has been depressed by concerns over satellite radio’s impact on the radio business.

When asked about this matter, the CEO (who otherwise had spoken quite plainly and logically about his business) dismissed satellite radio as a fad. And when I say “dismissed” it, I mean it.

Here’s a few quotes about satellite radio, from the CEO:

“Much ado about nothing.”

Primarily aimed at “gadget guys,” not “the soccer moms” who make up the typical radio listener.

To believe the “hype” you’d also believe that “everybody would be eating a Krispy Kreme donut and wearing a Taser on their belt.”

In sum, “it’s vapor.”

Now, I am not suggesting that satellite radio is going to immediately kill off terrestrial radio, or that there will never be the need for local radio once satellite has taken a large share of the market, or that this company is a bad company whose stock should be sold.

But, you would think that the CEO of a business under a threat—real or imagined—would at least acknowledge the threat and spend a little bit of time thinking about how to deal with the threat.

As opposed to dismissing it as "much ado about nothing."

Jeff Matthews
I Am Not Making This Up


Dan said...

Saw this in the chicago tribune yesterday. At least a few radio stations are taking notice:,1,6319105.story

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mfairview said...

Hey Jeffy, I think I missed it, but could you repost how many shares you and/or your firm are currently short on OSTK (puts inclusive please)? I would think it was the Jeffy Matthews way of fair disclosure while you're not making things up. It's 9pm EST 4/12/2005.